Apple’s tin ear to competition timing.

I’ve been using Apple products my whole adult life. But that doesn’t make me a cheerleader. And on the very day a competition investigation was announced, Apple did something so apparently boneheaded that they‘re rightly being called out.

I do have a slim legal figleaf for writing this post, albeit not one born of any particularly deep legal insight. But some things demand comment. And Apple’s treatment of HEY, a new email service, is one of them.

(The legal figleaf is about whether this treatment is a symptom of broader behaviour which violates EU competition law. Scroll down to get to that bit.)

I can’t remember which of Patrick O’Brian’s Aubrey/Maturin books it was (one of these days, a start-to-finish reread beckons – my late dad introduced them to me, and it’ll be one more way of communing with him somehow). But in one of them, Stephen Maturin – never a one for hierarchy or cant – expresses his disdain for patriotism, at least in its early 19th-century format.

It “generally comes to mean either my country, right or wrong, which is infamous, or my country is always right, which is imbecile“, he tells Jack Aubrey. [UPDATE: It was Master and Commander, the first in the series.]

Personally, I’m fine with patriotism. I’m a patriot, so long as that encompasses being honest about my country’s flaws and misconduct and wanting them fixed. But no-one but a charlatan could deny that Maturin’s characterisation is, far too often, spot on.

Tech has traditionally suffered from a similar tendency. Windows vs MacOS. Google vs everyone. iPhone vs Android. PlayStation vs Xbox. Facebook vs – well, probably common decency and humanity? (That one’s an outlier.) The flame wars and arrogance besetting tech arguments are painfully legendary. While lots of us (most, even) manage to recognise that our preferred system, app, platform isn’t perfect, and can and should learn from its competition, the sheer ugliness of tech-on-tech “conversations” (huh) gets unutterably wearing. Even setting aside its truly poisonous emanations, such as the misery inflicted on women and minorities by #Gamergate and similar foulnesses.

All this is really a preamble to explain that while I’ve used predominantly Apple kit my entire adult life – from Mac SEs at college, to PowerBooks including the wonderful Pismo, then a succession of MacBook Pros and Airs; iPhones of varying types ever since the 3G; and best of all, a sequence of iPads that have genuinely, radically, revolutionised the way I can and do work – I’m not a fanboi. (My friends from the Windows/Android side of the fence who’ve ribbed me for years are I hope honest enough to recognise this. As I do about them. I’m lucky in my friends.)

And so when Apple does something truly boneheaded, to put it as gently as one can, its friends need to call it out.

It’s come to a head through what could be a coincidence, although it’s a pretty telling one. On the same day that the European Commission announced an investigation into possible breaches by Apple of EU competition law involving the App Store and Apple Pay, HEY, a new email app by the people who brought you Basecamp, is facing getting kicked off the App Store because it sells subscriptions other than through an in-app purchase.

This boneheadedness has been brewing a long while. Apple charges a 30% cut on purchases through its App Store on iOS. (And on the Mac, although apps can be directly downloaded there, so it’s slightly different.) Apps in theory can’t route around that by selling subscriptions or licences elsewhere. Except for the ones that can. The classing of who can and who can’t would be laughable to anyone who wasn’t suffering from it – Reader apps? Really? And an unwritten business-vs-consumer divide? Come on. Dieter Bohn called it out as a prime example of the No True Scotsman fallacy, and I think he’s right (his piece for The Verge, which is excellent, is here). John Gruber, meanwhile, pointed out that the biz-consumer divide was both artificial and unworkable, and – just as bad – a betrayal of Apple’s own history.

The hypocrisy, both in HEY’s case and elsewhere, is impressive. Loads of email apps sell subscriptions elsewhere. Basecamp, for heaven’s sake, sells subscriptions through its website. That’s its business! The “Reader” definition is woolly at best. It often feels far more as though whether you get pushed around like this depends on how big you are. HEY isn’t the first, by a long way. But it’s the latest. And perhaps the timing may finally make a difference.

If I sound angry, that’s because I am. Apple’s 30% App Store tax is way, way too high. Its application is (put neutrally) sporadic. And – and here comes the legal figleaf – while I know very little about competition law (a terrifyingly technical field; try someone like Monckton Chambers for that), I really want to read what EU antitrust specialists are thinking about this.

Because to a very shaky first approximation, I wonder whether an argument could be made that Apple’s App Store policies breach Article 102 of the TFEU, which bans improper exploitation of market dominance, as follows:

  • The relevant market here isn’t all smartphones (Apple would probably walk home on that one, given that 85% of phones are Android) but iOS devices, on the basis that for a majority of their users substitution for another brand isn’t really an acceptable option given both -reference and platform lock-in.
  • Needless to say, Apple is dominant in the iOS market…
  • That dominance exists within the EU’s internal market, since iOS devices are sold across the region.
  • The dominance affects trade between member states, since a developer in Austria will routinely sell its app to customers in Malta. And so on.
  • Its pricing is excessive – in that it is 10 times what, for instance, a credit card processor might charge – and also discriminatory, in that its rules (as described above) seem to be arbitrary.
  • And it abuses its dominance by imposing an exclusive dealing obligation – by preventing anyone from accessing iOS users other than through the App Store, or more narrowly preventing them from charging other than through the App Store.

I’m pretty sure any genuine competition lawyer is going to read the above back-of-an-envelope analysis and laugh till they choke. There is no doubt acres of relevant authority which shows I’m foolishly misreading Article 102. Aside from anything else, the relevant market point is a massive what-if. But it’s not a bad place to start. (If anyone’s seen any good stuff on Twitter or elsewhere about this, from a legal analysis perspective, do let me know – whether via email or Twitter. I haven’t had time to go looking this past 24 hours owing to other deadlines, but I want to learn about it.)

And whether I’m right or not, this leaves a really foul taste in the mouth. Apple’s a commercial firm, and will do what’s best for it. No illusions on that score. But its leaders always used to say that making money was what happened as a by-product of building great things, not an aim in itself. I can’t see how this possibly matches up to that aspiration. Not even close.

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